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  1. #7131
    …just try’n to manage expectations… Maverick's Avatar
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    I'm VERY happy with this result. Contrary to bulls opinion , I see margins not under pressure at all. Margins rising from 28%to 33% says the oposite.
    The 100 unsold units Is the obvious red flag but as I've said before ,IMO, now the impulsive rushing to sign up has left the property market , it's now back to normality where housing stock ready to sell is required.
    Plus I prefer SUM style of not dropping margins for the sake of filling units up as fast as they can to look good to us shareholders.
    The healthy occupancy rates suggest plenty of demand.
    With the price on a stunning Pe of 15 considering it's proven growth path this company is great value long term.
    I can't see this or any retirement village share price rising meaningfully for a long time as it's become clear that people's mindset link this industry solely to property prices, and it is unwavering.
    However , these businesses are proving solid growth DESPITE flagging property values in some areas. Eventually years from now, buyers will return .
    I'm into SUM and of course donkey deep in OCA because of the underlying profit and dividend growth that will keep coming.
    I see this as a great, solid and predictable result from SUM.
    Last edited by Maverick; 22-02-2019 at 09:14 AM.

  2. #7132
    ShareTrader Legend bull....'s Avatar
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    Quote Originally Posted by Maverick View Post
    I'm VERY happy with this result. Contrary to bulls option , I see margins not under pressure at all. Margins rising from 28%to 33% says the oposite.
    The 100 unsold units Is the obvious red flag but as I've said before ,IMO now the impulsive rushing to sign up has left the property market , it's now back to normality where housing stock ready to sell is required.
    Plus I prefer SUM style of not dropping margins for the sake of filling units up as fast as they can to look good to us shareholders.
    The healthy occupancy rates suggest plenty of demand.
    With the price is on a stunning Pe of 15 considering it's proven growth path this company is great value long term.
    I can't see this or any retirement village share price rising for a long time as it's become clear that people's mindset link this industry solely to property prices, and is unwavering.
    However , these businesses are proving solid growth DESPITE flagging property values. Eventually years from now, buyers will return . I'm into SUM and of course donkey deep in OCA because of the underlying profit and dividend growth that will keep coming.
    I see this as a great, solid and predictable result from SUM.
    actually margins are up because of cost cutting , not the underlying margins from sales prices
    one step ahead of the herd

  3. #7133
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    Quote Originally Posted by Maverick View Post
    Oltech, this is a fundamental thing that is really important to understand in this sector. It's a good question that you need to get sorted.
    Basically "net profit" includes current property valuations.
    "Underlying profit" is the profit of the actual business operation with property value gains or losses stripped out.
    In this sector the only number I pay attention to is the underlying. Otherwise any company has the potential to do a "bob jones"(I presume from "Oldtech" , you were around in the eighties) , where all you need to do is revalue everything up on paper and say how well things are going.
    Thanks Maverick, makes perfect sense.

    Yep, I was around in the 80's but not really paying a lot of attention to the markets etc at the time ... I am an oldtech compared to some of the young whipper-snappers in my office, but at 49 have a few more years left to learn about this stuff yet I hope ...

  4. #7134
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    Quote Originally Posted by bull.... View Post
    actually margins are up because of cost cutting , not the underlying margins from sales prices
    So you are saying the 28% to 33% margin increase is a result of spending less on building in a time of huge construction cost increase and property market vagueness? If anything it demonstrates incredibly good knowledge of what will sell and where it will sell and a business who knows how to develop real estate. I dont know much but I'm happy with this result. In the end they dont build widgets so they have to keep on building regardless of property market movements and in the end everyone is getting older so these will sell either today tomorrow or next year and I will be a happy holder when they do

  5. #7135
    ShareTrader Legend Beagle's Avatar
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    http://www.sharechat.co.nz/article/b...ill-stronghtml

    SUM mixed feelings about this one. Historically, looking at the result there's no argument this was a credible result and SUMwhat (sorry couldn't resist) above my expectations. Expanding into Australia at present...one wonders if that is really wise but I must say I do think the board and Julian have got their heads screwed on pretty well so I guess this will be a leap of faith.
    Development margins forecast to head back down to 20-25% in the medium long term, (from last year's record level) gives a heads up about the changing nature of the real estate market.
    Much slower growth in embedded value this year.
    Land acquisitions look to be in good area's...got to be happy with that assuming one or both of them don't turn out to be another Boulcott street fiasco.
    No argument with their long term track record since listing and annual compound underlying earnings growth of 43% is a superb track record but house prices have roared ahead over that period too.
    I would like to see SUM (sorry I know its getting tired now) evidence of the current unsold stock level being sold before accepting at face value the 133 units delivered in December couldn't be settled due to timing as forgive me but I am pretty sure I heard the same song before about this timing thing last year and yet annual sales for 2018 were materially down on 2017.
    Cash flow up just 5% which is the second year in a row that cashflow growth has been uninspiring paints a different view of real progress.
    I think its a HOLD at the current price for those that don't think the real estate market is going to materially deteriorate and / or Cindy's Kindy won't climb into this sector at some stage.
    Historical underlying PE of 14.4 suggests fair value for this stage of the cycle. I remain of the view RYM is seriously overpriced.
    Disc: I put my paw up for a very small holding this morning.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

  6. #7136
    Reincarnated Panthera Snow Leopard's Avatar
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    Quote Originally Posted by Maverick View Post
    Oltech, this is a fundamental thing that is really important to understand in this sector. It's a good question that you need to get sorted.
    Basically "net profit" includes current property valuations.
    "Underlying profit" is the profit of the actual business operation with property value gains or losses stripped out.
    In this sector the only number I pay attention to is the underlying. Otherwise any company has the potential to do a "bob jones"(I presume from "Oldtech" , you were around in the eighties) , where all you need to do is revalue everything up on paper and say how well things are going.
    This is at best badly worded and at worst incredibly misleading.

    For your benefit I would suggest that revisit the accounts, presentations etc.

    Underlying profit includes realised gains on new sales and resales (& you need to understand the gain is from previous sale).
    Unrealised gains in the IFRS profit have a link to the realised gains and you ignore that at your peril.

    Time for lunch, bye.
    om mani peme hum

  7. #7137
    ShareTrader Legend Beagle's Avatar
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    SUM people reckon all this distinction between IFRS, underlying profit, embedded value e.t.c. is just nonsense gobbledegook. Its a property company for goodness sake and seeing as the international accounting standard's known as International financial reporting standards (IFRS) includes full revaluation on everything that hasn't changed hands during the year let's just run with that and be done with it !

    How could these expert boffins that have fellowships in their various countries accounting professional bodies and have brains far bigger than yours or mine possibly be wrong and who are we to say they are ? What could possibly go wrong with accepting the esteemed professional's expert profit measurement methodology at face value ?
    On that basis net profit is $214.5m which on 225.4m shares gives eps of 95.2 cps. At $6.33 the shares are on a historical PE of just 6.6 so must be dirt cheap !!
    Last edited by Beagle; 22-02-2019 at 08:50 PM.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

  8. #7138
    Aspiring to be an Awesome Bear
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    Quote Originally Posted by Beagle View Post
    SUM people reckon all this distinction between IFRS, underlying profit, embedded value e.t.c. is just nonsense gobbledegook. Its a property company for goodness sake and seeing as the international accounting standard's known as International financial reporting standards (IFRS) includes full revaluation on everything that hasn't changed hands during the year let's just run with that and be done with it !

    How could these expert boffins that have fellowships in their various countries accounting professional bodies and have brains far bigger than yours or mine possibly be wrong and who are we to say they are ? What could possibly go wrong with accepting the esteemed professional's expert profit measurement methodology at face value ?
    On that basis net profit is $214.5m which on 225.4m shares gives eps of 95.2 cps. At $6.33 the shares are on a historical PE of just 6.6 so must be dirt cheap !!


    Has SUM been rerated BBB Mr Beagle?!
    Last edited by RupertBear; 22-02-2019 at 08:59 PM.

  9. #7139
    Reincarnated Panthera Snow Leopard's Avatar
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    Done the first pass through the full year reports.

    Last year was 96 pages long with the financials beginning on Page 33.

    This year is a 140 behemoth with an extra 39 pages of pretty pictures before the financials start of Page 72.

    That is your first warning sign.

    That the company itself is flagging that margins are somewhat extraordinary and they expect them to normalise is your second warning sign.

    Forward P/E of 10 that is your third.

    Cash flow is the life blood of every company. Follow the money.
    Value SUM off of that.
    om mani peme hum

  10. #7140
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    Solid result but based on a growing rate in development margin of new units but for how long will be interesting. A lot to like in this report but a lot more for me to ponder going forward. The number of sales was down YoY and they've really kept their cards close to their chest in terms of revealing how sales are going in the current FY. I'm not sure how development margin maintains in future with a stagnant market in Auckland, but this was also touched on in their annual report with development margin expected to go down to 20-25% which I assume is fair.

    There would be a overhang of unsold units but the Chair and CEO report notes that their is currently still good demand for them in the current year. I'm interested to see the Q1 sales numbers just to alleviate any doubts. This is likely to be more of a short term issue with the peak saturation of retirees still not here yet.

    I do note that SUM now have the largest land bank in the country and were the largest builders in FY18. What I gather from the land banking is that there is still low hanging fruit in regional areas for land to be acquired at this stage. I'm sure with them exclaiming the build rate will go up to 600 in the next few years that this can only be a good thing.

    My view on price - Ultimately can't complain with a good result such as this. I am cautiously optimistic in terms of selling in the new year but there are many variables at work. I wouldn't be upset getting in at this price since I am long term, and at current PE of 14.5 its perhaps better value than a lot of overvalued stocks on the NZX. I'll hold my small position for now and look to accumulate this year as opportunities present.

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